Two New York men have been accused by the Securities and Exchange Commission of defrauding investors out of millions of dollars in what the agency described as a “Hamilton” ticket-resale Ponzi scheme.
The SEC said Friday that Joseph Meli, 42, and Matthew Harriton, 52, convinced at least 125 investors in 13 states to contribute a total of $81 million toward their four ticket-reselling businesses.
Since at least 2015, the men told investors that they would pool the investment to purchase tickets to popular shows, such as an Adele concert and the smash hit Broadway musical “Hamilton,” and resell them at a profit to generate high returns, according to the SEC complaint.
A funding agreement with an investor described in the complaint refers to a deal supposedly made between one of the ticket-reselling enterprises and a “Hamilton” producer to purchase 35,000 tickets.
But the SEC said none of the men’s ticket-reselling businesses had any legitimate agreement with that “Hamilton” producer and that the 35,000 tickets were never purchased with investor money.
“Contrary to the representations by Meli and Harriton, only a small portion of investor funds was used to make payments to entities with any apparent connection to the ticket reselling business,” the complaint states.
Instead, the men allegedly diverted almost $2 million for personal expenses, such as jewelry purchases and private school and camp tuition, according to the SEC.
At least $48 million of the incoming funds from investors was used to make Ponzi payments to earlier investors by using newer investors’ money, according to the SEC.
“As alleged in our complaint, Meli and Harriton raised millions from investors by promising big profits from reselling tickets to A-list events when in reality they were moving investor money in a circle and creating a mirage of profitability,” Paul Levenson, director of the SEC’s Boston regional office, said in a statement.
The SEC is seeking repayment of the funds received, in addition to interest and civil monetary penalties.
In a parallel action by the U.S. attorney’s office in the Southern District of New York, Meli and Steven Simmons, 48, of Wilton, Conn., were arrested Friday on charges of conspiracy, securities fraud and wire fraud for participating in an alleged Ponzi scheme that bilked investors to repay earlier investors in a hedge fund.
They were each freed on $1-million bail as U.S. Magistrate Judge James C. Francis IV rejected a prosecutor’s request that they be held without bail, according to the Associated Press.
In a statement to the AP, Michael Bowen, an attorney representing Meli, said that the complaint against Meli was not true and that he would “vigorously defend against the criminal charges.”
A person who answered the phone number listed to a Matthew Harriton declined to comment when contacted by a Los Angeles Times reporter. Meli could not be reached for comment.
A website called Dark Night Ventures contained the biography of a Joseph Meli, who was listed as a principal of 127 Holdings, one of the companies named in the SEC complaint as a firm controlled by defendant Meli.
That biography said Meli had served as chief executive of ticket and concert operator Bulldog Entertainment Group, which the Wall Street Journal reported was purchased by Warner Music Group in 2007. The bio said Meli then served as Warner Music Group’s senior vice president of U.S. recorded music for about a year.